Middleware Mergers Next

 
 
By John Mulqueen  |  Posted 2001-04-16 Email Print this article Print
 
 
 
 
 
 
 

A lot of once-high-flying middleware software suppliers are now wounded ducks in a marketplace rife with acquisitions and mergers.

A lot of once-high-flying middleware software suppliers are now wounded ducks in a marketplace rife with acquisitions and mergers.

Companies such as Mercator Software, SilverStream Software, Tibco Software and even webMethods are all potential takeover targets, as their stock prices have tumbled along with their revenue growth, said industry experts. Even vendors such as CrossWorlds Software, SeeBeyond Technology and Vitria Technology, which have not reported revenue or earnings problems, are vulnerable to takeover bids.

"I think all these companies are fair game," said Gregg Speicher, a securities analyst at Stifle Nicolaus. "There are a lot of software companies that do not have strong integration companies and could [look to acquire them]."

SeeBeyond, which used to be Software Technologies, has emerged as a strong player in application integration in recent months, pushing past the health-care market — where it is a dominant player — into telecommunications, financial and other industries. Vitria is a leader in telecommunications, but is believed to be hurting because of a slowdown in spending by carriers. CrossWorlds is a young company that only went public last June. All are possible takeover targets, analysts said.

Some of these companies — for example, Mercator, SilverStream and Tibco — are trading at all-time lows, and all of them are well off their highs, along with the rest of the Nasdaq.

Phillip Merrick, CEO and chairman of webMethods, said his company is talking with BEA Systems about joint development projects, but that is all. He does not want to be acquired.

Vitrias two founders — President JoMei Chang and Chief Technology Officer Dale Skeen — still own 35 percent of the company between them and have no intention of selling out, said Richard Kain, a company spokesman. "They are in it for the long haul."

Mercators board has said the company is not for sale, according to a spokesman who deferred all questions about financial matters until April 19, when the company will have its quarterly financial report.

But depressed share prices, stiffening competition and the large number of likely acquisition candidates all point to continuing consolidation, said Ken Kiarash, an analyst at Buckingham Research Group. "The rate will increase in the next several quarters."

It fits the pattern of the industry. Iona Technologies recently acquired Netfish Technologies for its eXtensible Markup Language capability, and Vitria is buying XML Solutions for the same reason. Sybase plans to acquire New Era of Networks, a troubled company with good software integration capability.

Exactly who the acquisitors are likely to be is open to question. Oracle and BEA Systems are mentioned most often. Jane Stanhope of Giga Information Group noted BEA does not have a good software integration product. She also said Vitria is the company most likely to be acquired because of its low stock price.

Most integration companies are still small — none has reached the $200 million revenue level — and their future will depend on how that market unfolds, said Forrester Research analyst Chris Deal. "These are all potentially attractive acquisitions," he said. "There is time to buy into integration companies."

 
 
 
 
 
 
 
 
 
 
 

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